The $3.1 billion purchase will fill a crucial gap in Qualcomm's mobile processor portfolio.
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Qualcomm, a major supplier of mobile phone chips that connect to 3G networks, has announced plans to buy Wi-Fi chipmaker Atheros Communications for $3.1 billion in cash, filling a hole in Qualcomm's product portfolio.
Qualcomm said Wednesday that it has agreed to pay $45 a share for Atheros stock. The deal has been approved by both company's boards and awaits the OK from regulators and Atheros stockholders. The transaction is expected to close in the first half of this year, after which Atheros president and chief executive Craig H. Barratt is expected to join Qualcomm as president of the company's networking and connectivity unit.
Qualcomm has benefited from the rising popularity of smartphones as a major supplier of chips that connect to wireless carriers' 3G data networks. In November, the company beat analyst expectations in its fiscal fourth quarter results.
Qualcomm is currently developing new products in its Snapdragon line to support carriers' transition to faster 4G networks, such as Verizon Wireless' recently launched long-term evolution (LTE) mobile broadband network. Broadcomm is Qualcomm's major rival in the mobile phone chip market.
Qualcomm is not a player in the market for Wi-Fi connectivity chips, a rapidly growing market driven by the increase in mobile devices, such as tablets. Wi-Fi connectivity is already standard in most laptops today. The Atheros acquisition brings the technology Qualcomm needs to become an immediate competitor against companies like Marvell and Intel, without having to develop the technology itself.
"It is Qualcomm's strategy to continually integrate additional technologies into mobile devices to make them the primary way that people communicate, compute, and access content," Paul E. Jacobs, chairman and chief executive of Qualcomm, said in a statement. "This acquisition is a natural extension of that strategy into other types of devices."
The deal is the latest in several large transactions in the tech industry, including Intel's $7.7 billion purchase of McAfee and Hewlett-Packard's $2.3 billion acquisition of 3PAR. Qualcomm sold in December the spectrum licenses for its FLO TV mobile broadcast video service to AT&T for $1.93 billion.
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